Hawke's Bay Council gives green light to Napier Port IPO

The Hawke's Bay Regional Council has approved the partial privatisation of Napier Port. Photo/File.

The Hawke's Bay Regional Council has confirmed that it will proceed with the partial privatisation of Napier Port, through an initial public offer, subject to pricing and market conditions.

The council said a final decision on pricing and market conditions would be made in June.

Regional Council Chair, Rex Graham, said a minority IPO could meet the council's objectives and satisfy the terms upon which the Council consulted the Hawke's Bay community.

"We have agreed today that a 45 per cent IPO of Napier Port will deliver the funds needed to enable the Port to invest in its future growth, while protecting ratepayers from the costs, diversifying the Regional Council's income streams and maintaining majority ownership and control," he said in a statement.

"We set a range of conditions around a potential IPO on December 19 last year and these will be met," he said.

The last hurdle was around pricing and market conditions, but the offer looked likely to proceed in early July.

Indicative valuations of Napier Port supported the parameters that the Regional Council consulted upon in October – November 2018.

"The objectives in this exercise have not changed," he said. "Napier Port needs significant investment in order to manage congestion and to prepare for future growth."

The port needs a new wharf, which is estimated to cost between $170 - $190m and anticipated to be completed by 2022.

"A minority IPO protects ratepayers from these costs and enables the Regional Council to diversify and de-risk its income streams, which are currently overly dependent on Napier Port," he said.

Graham said resolving the issue of the Port's capital structure would enable the Council to focus its effort and resources on continuing to address a wide range of pressing environmental challenges facing Hawke's Bay, including ensuring its infrastructure and land and water management was able to withstand more extreme weather as a result of climate change.

Proceeds to the Regional Council from the IPO will be invested and held in a future investment fund, diversifying the Regional Council's balance sheet and income streams.

All Hawke's Bay residents, including local iwi, wanting to buy shares in Napier Port would be offered a guaranteed minimum allocation of shares and there would be a period for locals to pre-register their interest before an offer opened. There would also be a priority offer for Port staff.

In addition to the appointments of Deutsche Craigs Limited and Goldman Sachs New Zealand as Joint Lead Managers, the Council has confirmed the appointment of Forsyth Barr Limited as retail Co-Manager to the offer.

In March, the Regional Council voted to introduce a number of additional measures to protect its majority shareholder position in Napier Port, including ensuring its shareholding could not be diluted to below 51 per cent and committing to appointing two new Council-affiliated directors to the Napier Port Board.